Oracle Posts Modest Earnings Gains in Q2 2012

Software and services business continue to do well, but hardware sales were down 14 percent.

Oracle (NASDAQ: ORCL) may not have reached all the sales goals at which it aimed, but the fiscal Q2 2012 earnings report it delivered Dec. 20 still had to be satisfactory for itself and shareholders.

Generally, the company did well in its software and services businesses but lost some ground on the hardware side.

The full-service IT provider's total revenues improved 2 percent to $8.8 billion on the quarter, with new software license revenues up 2 percent to $2 billion. Software license updates and product support revenues were up 9 percent to $4 billion.

However, hardware systems products revenues were down 14 percent to $953 million. Operating income was up 12 percent to $3.1 billion, and its operating margin was 35 percent.

"We sold 200 of either Exadata- or Exalogic-engineered systems in Q2, and we expect to sell 300 in Q3, and 400 in Q4," CEO and co-founder Larry Ellison said on the conference call to analysts and journalists. "When we get to that (400) level, this becomes a $1 billion business."

Exadata server systems, loaded with high-end Infiniband connectivity, typically sell for $1 million or more. Exalogic analytics servers are also as expensive, and with various types of analytics services now available for much less in the form of cloud delivery, some potential customers may have been turned off by that rich of an investment.

Oracle President Mark Hurd said on the call that Oracle has hired "a net number" of about 1,700 more sales professionals in the first half of this fiscal year to help sell the company's new Fusion Cloud applications, including CRM and ERP, as well as its servers and storage.

Oracle stock price was down about 9 percent at $26.49 in after-hours trading following the report. The stock had closed at $29.17.

Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz